The Morning Ledger: CFO Pay Packages Decline

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Good morning. Pay for chief financial officers at S&P 500 companies pulled back last year by about 2% to a median compensation package of $3.3 million, according to CFO Journal’s annual survey. But the year was also noteworthy for a woman occupying the top spot in pay, with another in the top 10. And among female financial chiefs, the reaction was the same: that it’s about time.

Oracle Corp.’s co-president and CFO, Safra Catz, was the top earner in the group last year, with a pay package valued at $43.6 million. Accenture PLC’s Pamela Craig, in the No. 8 spot, received $12.8 million.

Having a female executive in the No. 1 spot in terms of pay is “well overdue,” said Gilead Sciences Inc. CFO Robin Washington. “Your risk profile doesn’t change with your gender if you are taking on a key role. Having that equality is really important, and I think it will continue to attract more women to take on these roles.” Judy Brown, CFO of Perrigo Co., said, “If they’re doing the same job, they should be making the same money.”

THE CFO NETWORK ANNUAL REPORT

The Wall Street Journal’s annual report from this year’s CFO Network meeting in Washington finds that CFOs are feeling optimistic about business, but down on government policy, the WSJ’s John Bussey writes. Corporate tax policy and cybersecurity readiness topped their list of complaints.

But in listing their priorities for the year ahead, while tax reform remained on top, other issues floated to the surface, like the need to focus on value creation and revamp the U.S. educational system to match the skills being taught to what employers need. Read the full report.

THE DAY AHEAD

At 10 a.m. we’ll see data on new-home sales in May and also a reading on consumer confidence for June. Analysts expect that new-home sales climbed to an annual rate of 441,000 during the month. Consumer confidence in June is expected to have ticked up to 83.7, from 83 in May.

Carnival Corp. reports earnings Tuesday, and analysts are forecasting earnings of 2 cents a share for its fiscal second quarter, down from 5 cents a year ago. Comparisons should have been flattering, given that the year-ago period was the one dented by an embarrassing accident in February 2013, Ahead of the Tape’s Spencer Jakab writes. But since then the cruise operator has had to resort to steep discounts to fill its ships.

CFOJ EXCLUSIVE

Retiree medical liabilities fall. Companies saw their liabilities for retiree medical costs fall last year nearly 16% from 2012, but they may lose those savings as Americans live longer and interest rates remain low, CFOJ’s Emily Chasan reports. Among the Fortune 1,000 companies, the combined liabilities for retiree medical benefits totaled $285 billion at the end of last year. Unlike corporate pensions, companies aren’t usually required to fund these plans and generally pay the bills as they come in. More than two-thirds of companies with such plans haven’t set aside any funds to cover the expected future costs.

CORPORATE NEWS

Under ousted CEO, Target lost its way. Long before a massive data breach and a money-losing expansion into Canada, there were problems at the top of the retail chain, the WSJ reports. Management became mired in a new thicket of bureaucracy, and creative leeway, once part of Target Corp.’s DNA, took a back seat to rigid performance metrics.

Big investors missed stock rally. Corporate pension funds and university endowments have missed out on much of the rally for stocks since 2009, following a push to diversify into other investments that have had disappointing performances, the WSJ’s Gregory Zuckerman reports. The institutions, ranging from large corporations such as General Motors Co. to big universities such as Harvard, have been shifting to hedge funds, private equity and venture capital. But while these alternative investments outpaced stocks during 2008’s market meltdown and are seen as potentially less volatile, they have badly lagged the S&P 500 since 2009.

More vehicles recalled for air bags. Japanese, U.S. and German car makers are recalling cars equipped with potentially faulty air bags supplied by Tokyo-based Takata Corp., bringing the total number of cars affected to nearly 10 million over five years, the WSJ reports. Takata is one of three major manufacturers of air bags and supplies similar components to auto makers around the world.

American Apparel’s CEO signals a fight to retain control. Dov Charney, the embattled chief executive of American Apparel Inc., is fighting to remain in charge after directors last week stripped him of his chairman’s title and moved to fire him, the WSJ reports. Mr. Charney is seeking arbitration in an effort to clear his name and keep his titles of president and chief executive.

Yahoo chief’s audience left cold by late arrival. For media companies, the Cannes advertising festival is all about getting face time with top media buyers and advertisers, the WSJ’s Suzanne Vranica reports. Yahoo Inc. CEO Marissa Mayer missed a golden opportunity to do just that last week. She was nearly two hours late to a dinner arranged by Interpublic Group of Cos. to meet executives from marketers such as Mondelez International Inc., brewer MillerCoors LLC and Greek-yogurt maker Chobani Inc.

Freddie and Fannie Bonds don’t share and share alike. Pricing of the mortgage giants’ risk-sharing bonds suggest they aren’t living up their name, the WSJ’s John Carney reports. The bonds are meant to transfer some of the risk of default on underlying mortgages to investors, but the low yields suggest investors don’t believe that risk is being transferred. Instead, they may believe the bonds are merely safer bets than their ratings indicate, and also still believe in an “implicit guarantee” that they’ll be supported even if their default triggers are tripped.

Bets rise on stock bumps ahead. A gauge of expected market volatility last week hit its lowest level since 2007, adding to losses for investors wagering on swings, the WSJ’s Chris Dieterich reports. Yet many traders are sticking to their bets that the placid stretch is ending. Some traders say a host of forces will keep a lid on asset-price swings, but others say record stock indexes and high bond prices spell trouble and wild trading ahead.

Delta chief softens stance on Ex-Im Bank. The head of Delta Air Lines Inc. is expected to back the Export-Import Bank of the U.S. providing some support for sales of Boeing Co.’s biggest jets, softening his stance even as the agency’s political critics step up a campaign to have it abolished, the WSJ’s Doug Cameron reports. Delta CEO Richard Anderson plans to use a speech in Washington on Tuesday to distance the company from the calls of some Republicans and small-government advocates for the bank to be wound down, arguing it has a vital role in preserving U.S. manufacturing jobs.

Shire, AbbVie set out new targets.Shire PLC and AbbVie Inc. separately set out new financial targets to investors following U.K.-listed Shire’s rejection of a $46 billion takeover advance from its U.S. rival, the WSJ’s Hester Plumridge reports. AbbVie’s interest in Shire is driven in part by a desire to relocate to the U.K. via an inversion deal, Shire has said. That would let it deploy overseas cash and reduce its tax burden.

Corinthian Colleges, U.S. reach deal.Corinthian Colleges Inc. reached a deal with the federal government to keep operating while the for-profit college owner develops a plan to sell some schools and gradually close others, the WSJ reports. Under the stopgap measure, the U.S. Education Department agreed to release $16 million in federal funds to allow Corinthian to continue operating.

Amazon, Warner Bros. near resolution on pricing dispute.Amazon.com Inc. has reversed a halt on preorders of movie discs from Time Warner Inc.’s Warner Bros. studio as the two sides near a resolution to a pricing dispute, the WSJ reports. Amazon has long used the tactic to gain leverage with certain suppliers. It has been seeking more favorable financial terms from Warner, though the exact details are unknown.

Web naming group pushes ahead. The battle for power over control of Web addresses is heating up as domain names like .com and .org are losing prominence as more Web traffic funnels through mobile apps, search engines and social networks, the WSJ’s Lisa Fleisher reports. But businesses, nonprofit organizations and governments say domain names still serve a core function of proving authenticity.

Seiko Epson president bets on inkjet revival. While other printer companies race to introduce 3-D printers, Seiko Epson says there is still opportunity in putting words and images onto paper, the WSJ’s Eric Pfanner reports. 3-D printers now on the market lack precision and efficiency, and operate with too limited a range of materials for commercial use, said Minoru Usui, president of Epson.

REGULATION

Officials at Ex-Im Bank face probes. The U.S. Export-Import Bank has suspended or removed four officials in recent months amid probes into allegations of gifts and kickbacks, the WSJ’s Damian Paletta reports. One employee, Johnny Gutierrez, an official in the short-term trade finance division, allegedly accepted cash payments in exchange from trying to help a Florida company obtain U.S. government financing to export construction equipment to Latin America. The Ex-Im Bank hasn’t disclosed information about the investigations, and declined to comment on Mr. Gutierrez’s status, citing privacy laws.

U.S. seeks records in inquiry tied to Dean Foods, Clorox. Federal authorities have sought information from two companies in connection with an insider-trading probe examining the activities of investor Carl Icahn, sports bettor William T. Walters and professional golfer Phil Mickelson, the WSJ reports. Dean Foods Co. in recent weeks received a subpoena from criminal authorities ordering the company to produce information, and Clorox Co. received a request from the Securities and Exchange Commission related to trading in the company’s shares.

Court backs most EPA carbon controls. The Supreme Court allowed the Environmental Protection Agency to require greenhouse-gas controls on power plants and other sources of pollution, but ruled it was too aggressive in its approach, the WSJ reports. The court’s divided decision followed a middle-ground approach that left both environmental groups and industry challengers satisfied.

Court gives companies more room to challenge class actions. The Supreme Court gave companies more room to challenge class-action lawsuits at the early stages of the litigation, the WSJ reports. At the same time it declined to overrule legal precedent that has undergirded investor class actions for more than two decades. As a result of the ruling in a long-running case involving Halliburton Co., companies can present evidence at an early stage in litigation to try to demonstrate that misleading public statements didn’t affect stock prices.

ECONOMY

Existing-home sales higher in May. Sales of previously owned homes rose strongly in May but remain shy of last year’s pace, a sign the housing market has tentatively regained its footing this spring, the WSJ’s Eric Morath reports. Sales of existing homes increased 4.9% in May to a seasonally adjusted annual rate of 4.89 million homes, the fastest pace since October, the last time annualized sales topped the five million mark.

CFO MOVES

Eisai Inc., a U.S.-based subsidiary of Eisai Co. Ltd., a Japanese pharmaceutical company, named Barry Lederman as its chief financial officer. Mr. Lederman joins Eisai from Wedgewood Pharmacy, where he was CFO. A spokeswoman for the subsidiary told CFO Journal that Mr. Lederman succeeded Shaji Procida, who was promoted to president and chief operating officer at the company this spring.

Great Lakes Dredge & Dock Corp., an Oak Brook, Ill.-based company, named Mark Marinko as its CFO. Mr. Marinko was previously president of the consumer services division of TransUnion LLC. He succeeds interim CFO Katherine Hayes, who is a vice president and controller at Great Lakes. Mr. Marinko will receive a salary of $300,000, according to a regulatory filing. Former CFO William Steckel received compensation valued at $768,259 last year, according to a proxy filing.

Landauer Inc., a radiation-detection equipment company in Glenwood, Ill., named Mark Zorko as its interim CFO. Mr. Zorko was a senior financial adviser at Landauer. He succeeds Michael Burke, who departed the company. Mr. Burke received compensation valued at $771,627 last year, according to a proxy filing.

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